What Lenders Look for in a Hotel Loan
Key underwriting criteria hotel lenders evaluate: STR performance, DSCR, sponsor strength, and market fundamentals.
Hotel lenders evaluate deals holistically. Understanding their priorities helps sponsors prepare stronger packages and set realistic expectations — without assuming approval.
Property Performance
Lenders scrutinize:
- Trailing 12-month STR (occupancy, ADR, RevPAR)
- Trend vs. competitive set
- Franchise compliance and PIP status
- Property condition and capital needs
Sponsor & Structure
Sponsor evaluation includes:
- Hospitality experience and track record
- Liquidity and net worth
- Entity structure and guarantor strength
- Business plan clarity for value-add deals
Financial Metrics
DSCR, LTV, and debt yield are standard metrics. Most hotel lenders target 1.20x–1.35x DSCR on stabilized deals, though requirements vary. Use our DSCR calculator for preliminary analysis.
Related Resources
Related Questions
What DSCR do hotel lenders typically require?
Many hotel lenders target 1.20x–1.35x DSCR, though requirements vary by flag, market, loan type, and sponsor. Strong sponsorship and market fundamentals may offset thinner coverage in some cases.
What documents will I need to submit?
Common requirements include personal financial statements, entity documents, trailing 12-month operating statements, STR reports (for hotels), rent rolls, leases, and a purchase contract or refinance payoff statement. We provide a tailored checklist for your deal.